Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The disclosure set forth above in Item 1.01 of this Current Report
related to the Investor Rights Agreement is incorporated by reference herein.
Effective as of the Closing Date, pursuant to the terms of the Investor
Rights Agreement and as approved by the Board, Mr. Hideharu Konagaya was appointed to the Board to serve as a non-independent, Class A
director with a term expiring at the 2023 annual meeting of stockholders and incumbent Mr. Takayuki Katsuda will continue to serve as
a Class C director. Mr. Hideharu Konagaya was not appointed to serve on any committees of the Board.
Mr. Hideharu Konagaya is a Senior Managing Director, the Head of Finance
& Accounting Department, and the Head of Procurement Department of the Investor. Mr. Hideharu Konagaya also serves as a member of
the Board of Directors of the Investor and is the Chief Executive Officer of Koito Insurance Services, Co., Ltd., a private subsidiary
company of the Investor.
In connection with his appointment, Mr. Hideharu Konagaya will enter
into the Company’s standard indemnification agreement for directors and executive officers. The indemnification agreement generally
requires the Company to indemnify directors to the fullest extent permitted by law.
The Company is not aware of any related transactions or relationships
between Mr. Hideharu Konagaya and the Company that would require disclosure under Item 404(a) of Regulation S-K.
Item 5.03. Amendment to Articles of Incorporation or Bylaws, Change in Fiscal Year.
Certificate of Designations Designating the Series A Preferred
Stock
On January 18, 2023, in connection with the consummation of the Transaction,
the Company filed the Certificate of Designations with the Secretary of State of the State of Delaware, designating the Series A Preferred
Stock and establishing the powers, designations, preferences and relative, participating, optional or other rights, and the qualifications,
limitations or restrictions of the shares of Series A Preferred Stock included in such series. The Certificate of Designations became
effective upon filing.
Ranking; Dividends
The Series A Preferred Stock ranks senior to the shares of the Common
Stock, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company and ranks junior to all secured and unsecured indebtedness. The Series A Preferred Stock has
a liquidation preference equal to the initial purchase price of $1,000.00 per share, increased by accrued but unpaid dividends per share
(the “Liquidation Preference”). The holders of Series A Preferred Stock are entitled to participate in all dividends
declared on the Common Stock on an as-converted basis and are also entitled to a cumulative dividend at the rate of 3.250% per annum,
if paid in cash, or 4.250% per annum, if paid “in kind”, payable quarterly in arrears and subject to a maximum increase of
1.0% under certain specified circumstances, in each case, subject to the terms and conditions set forth in the Certificate of Designations.
Conversion Rights
Subject to certain anti-dilution adjustments, including with respect
to certain issuances with an effective price below the then current Conversion Price (as defined in the Certificate of Designations),
and customary provisions related to partial dividend periods, the Series A Preferred Stock is convertible at the option of the holders
thereof at any time following January 19, 2024 into a number of shares of Common Stock equal to the Conversion Rate (as defined in the
Certificate of Designations), which initially is approximately 386.8472:1 based on the initial Conversion Price of $2.585; provided
that each converting holder will receive cash in lieu of fractional shares (if any).
Solely with respect to shares of Series A Preferred Stock held by the
Investor or an Affiliate of the Investor that is a Permitted Transferee (as defined in the Certificate of Designations) (such shares,
the “Investor Shares”), any time after the Company having recorded positive net income pursuant to GAAP in its audited
financial statements for any fiscal year the end date of which falls after January 19, 2028, the Company may deliver a notice to convert
all (but not less than all) of the outstanding Investor Shares into shares of Common Stock if the closing sale price of the Common Stock
was greater than or equal to 200% of the Conversion Price as of such time for at least twenty (20) trading days (whether or not consecutive)
in the thirty (30) consecutive trading day period (including the last trading day of such period) immediately prior to the date of such
notice (the “Market Price Condition”), in which case such Investor Shares must be converted within twelve (12) months.
Solely with respect to shares of Series A Preferred Stock that are
not Investor Shares (such shares, the “Non-Investor Shares”), if the Market Price Condition is satisfied at any time
after January 19, 2030, then the Company may deliver a written notice to each holder (other than holders of Investor Shares) informing
such holder that all, but not less than all, of such holder’s Series A Preferred Stock will automatically convert into shares of
Common Stock on the date specified by the Company.
Pursuant to the provisions described in the preceding two paragraphs,
each share of Series A Preferred Stock then outstanding shall be converted into (A) a number of shares of Common Stock equal to the Liquidation
Preference for such share of Series A Preferred Stock divided by the Conversion Price then in effect plus (B) cash in lieu of fractional
shares as set out in the Certificate of Designations.
The actual conversion date of any shares of Series A Preferred Stock
may be subject to delay in order to satisfy any regulatory approvals that may be necessary in connection therewith, subject to certain
Company repurchase rights with respect to shares of Series A Preferred Stock that are not promptly converted following receipt of applicable
regulatory approvals.
Company Repurchase Option
The Company has the option, upon thirty (30) days’ advance notice,
to (A) repurchase all (but not less than all) of the outstanding Investor Shares on or after the second anniversary of the Closing occurring
after the end of the applicable fiscal year for which the Company has recorded positive net income, if the Company has recorded positive
net income pursuant to GAAP in its audited financial statements for any fiscal year the end date of which falls after January 19, 2028,
and (B) all or any portion of the outstanding Non-Investor Shares any time after January 19, 2030. The purchase price of any shares of
Series A Preferred Stock repurchased pursuant to this option is equal to the greater of (A) the Liquidation Preference and (B) the amount
per share of Series A Preferred Stock equal to the number of shares of Common Stock that such holder would have received had such holder
converted such share of Series A Preferred Stock into Common Stock multiplied by the arithmetic average of the volume-weighted average
price per share of Common Stock for each of the ten (10) consecutive full trading days immediately preceding the day of such advance notice.
Fundamental Change Put Right
If the Company undergoes a Fundamental Change (as defined in the Certificate
of Designations), each holder of outstanding shares of Series A Preferred Stock will have the option to require the Company to purchase
any or all of its shares of Series A Preferred Stock at a purchase price per share of Series A Preferred Stock equal to the Liquidation
Preference of such share of Series A Preferred Stock as of the applicable date (“Fundamental Change Repurchase”). In
lieu of electing a Fundamental Change Repurchase, such holder may elect to convert such shares of Series A Preferred Stock, at 110% of
the then current Conversion Rate. A “Fundamental Change” will occur upon, among other things, (A) any person or group of persons
other than the Investor Parties (as defined in the Certificate of Designations) owning, directly or indirectly, more than 50% of the total
voting power of the Company’s voting stock, (B) consummation of any recapitalization, reclassification, share exchange, consolidation,
merger, sale of all or substantially all of the Company’s assets or similar transactions, (C) approval by the Company stockholders
of any liquidation or dissolution of the Company, (D) the Common Stock ceasing to be listed on the New York Stock Exchange or NASDAQ or
(E) solely with respect to the Investor Shares, the Company entering into certain acquisition or strategic transactions with a Competitor
(as defined in the Certificate of Designations), in each case subject to certain exceptions as set forth in the Certificate of Designations.
Voting Rights
The holders of shares of Series A Preferred Stock have no voting rights
except that the vote or consent of the holders of a majority of the shares of Series A Preferred Stock then outstanding is required with
respect to certain actions that would have an adverse effect on the rights, preferences, privileges or voting power of the Series A Preferred
Stock, the creation and issuance of shares of the Company’s capital stock that would rank pari passu or senior to the Series A Preferred
Stock and any increase or decrease in the authorized number of shares of Series A Preferred Stock or issuance of shares of Series A Preferred
Stock after the issuance date, subject to certain exceptions. In such cases, the holders of Series A Preferred Stock will have one vote
per share on any matter on which the holders of Series A Preferred Stock are entitled to vote.
Taxes
In light of the Investor being a non-U.S. person, the Company has agreed
to certain tax treatment, tax withholding and other matters as specified in the Certificate of Designations.
The foregoing summary of the Certificate of Designations does not purport
to be complete and is subject to, and is qualified in its entirety by, the full text of the Certificate of Designations, which is filed
as Exhibit 3.1 to this Current Report and is incorporated herein by reference.